Sent: Thursday, February 19, 2004 8:12 PM
Subject: Trade Through Rule
Mr. Chairman,
I can not believe that the SEC is actually considering
abolishing the 'Trade Through Rule'.
The very mission of the Securities Exchange Commission is to
protect the least sophisticated investors, and this rule is the
platform on which those protections are built. If the trade
through rule is abolished, do you genuinely think that
professional traders and investors are going to allow themselves
to get worse prices in favor of execution speed??
Market professionals demand, and get, both already. It is the
small investor who will wind up on the short end of this very
long stick if you allow executions at whatever price is most
convenient (read: profitable) for the executing firm.
Please don't fall for the laughable argument that today's
investor is too savvy to get taken. Ninety percent of today's
retail orders are executed electronically. Most firms offer
nearly free execution rates for market orders. That's because
they make a living by selling these market orders to trading
firms. Why would a trading firm actually pay for an order to
execute? Not because they are going to get the best possible
price for the customer, but because that customer is going to get
the absolute worst legal price that the trading firm can give.
The trading firm is the other side of that customer's trade, and
then the trading firm goes out and gets the best possible
execution for themselves, thereby locking in a few cents that
rightfully should have gone to the customer originally.
By eliminating the trade through rule, you'll simply take the
cuffs off the trading firms.
When Mr. Jones in Ohio goes on the internet and places his
order to buy 500 shares of XYZ Corp., his broker will forward his
order to a trading firm who will sell Mr. Jones XYZ at whatever
price he likes. XYZ is offered at 20.00 on the NYSE, but Mr.
Jones will get an execution at 20.15, all in the name of speed
and accuracy, or course. Mr. Jones, savvy investor that he is,
will brag to his friends about the super fast, and super cheap
purchase he just made, while Mr. KnightTrimark will brag to his
fellow traders about the $75.00 he just stole from Mr. Jones.
I challenge you to explain to me how that will make America's
marketplace better, or safer for it's investors.
Please Mr. Chairman, anyone with an ounce of common sense can
see that the trade through rule is one of the few protections
that small investors have left. It's of paramount importance that
you remember your mission to protect America's investors and
leave the trade through rule as it is.
Vincent J Buccigrossi